Pricing decisions for substitutable products with horizontal and vertical competition in fuzzy environments

This paper considers the pricing decisions of substitutable products which are produced by duopolistic manufacturers respectively and then sold by one common retailer to the consumers. Both the manufacturing cost and the customer demand for each product are characterized as fuzzy variables. Six expected value models are developed to explore the effects of the duopolistic manufacturers' three pricing strategies (i.e. Bertrand competition, Stackelberg competition, cooperation) and vertical competition between the manufacturers and the retailer on the optimal pricing decisions and channel profit-split of a two echelon supply chain, and the corresponding analytical solutions are derived. Finally, a numerical example is given to illustrate the effectiveness of the proposed models, and to gain additional managerial insights.